Cost to Raise a Child Nears $250,000, USDA Report Finds

cost of raising child $250,000

If you want to have children, be ready to pay — it will set you back nearly $250,000, according to a new U.S. government report.

The average cost to raise a child born in 2013 to the age of 18 is $245,340 for food, shelter, education and all other expenses, the U.S. Department of Agriculture found in its annual report on family expenditures.

The good news: That’s the lowest annual increase since 2009.

The bad news: That’s likely to change as housing prices – the greatest single expense in raising a child at 30% of total cost – is expected to rise as the U.S. economy continues to recover from the financial crisis.

The worse news: Education and day care costs are continuing to rise – on average, those expenses ate 18% of the average family’s income in 2013, compared to only 2% in 1960, when the USDA first began studying the data. That mirrors a report last year that found that the cost to send an infant to day care is now higher than in-state college tuition and fees in 31 states.

Figure in the cost of sending a child to a four-year university education, a cost not factored in the USDA report, and the cost balloons dramatically. The average cost per year — including tuition, room and board – for a public, four-year undergraduate program is $18,391 and grows to nearly $41,000 per year for a private, four-year program, according to College Board data.

The actual cost of raising a child born in 2013 will rise to $304,480 over the next 18 years with projected inflation at 2.2%, the report says.

Location, income determine cost

Costs vary depending on income bracket and location: High-income families in big Northeastern cities such as New York and Boston are projected to spend about $455,000 to raise a child. Rural, low-income families spend much less, an average of $145,000, the report estimates.

 

 

cost of raising a child

 

Overall, the location with the highest average cost is urban areas of the Northeast at $282,480; urban costs in Western cities average $261,330, followed by cities in the Midwest ($240,570) and urban areas in the South ($230,610).

Day care costs balloon

Child care is the second biggest cost for middle income families, a cost unheard of when the USDA began tracking the data.

“In 1960, the first year the report was issued, a middle income family could have expected to spend $25,230 ($198,560 in 2013 dollars) to raise a child until the age of 18,” the USDA said in a press release. “Some common current-day costs, such as child care, were negligible in 1960.”

Like all costs, the average expense of day care varies widely depending on location. The average cost is $11,666 per year, but prices can range form $3,500 to nearly $19,000 a year, according to the National Association of Child Care Resource & Referral Agencies. “The average annual cost of full-time care for an infant in center-based care ranges from $5,496 in Mississippi to $16,549 in Massachusetts,” a 2014 report from Child Care Aware shows.

A survey by Care.com earlier this year found the average person paid $18,000 a year on child care, but nearly half the families surveyed don’t budget for that cost.

 

Costly child care

 

The cost of child care is believed to be the reason why  nearly 30% of American moms are now setting aside careers to stay at home to care for their children, according to a report from the Pew Research Center earlier this year.

After bottoming out at 23% in 1999, the percentage of women staying at home has jumped to 29%. The reason appears to be economic: Only 5% of those mothers now staying at home have a master’s degree and a family annual income of $75,000 or more, the Pew report notes.


Family photo via Shutterstock
Infographic by Brian Yee.

Read more on NerdWallet: Wait, Day Care Is Now More Expensive Than College?

We want to know your thoughts on this article.  Meet us over on FacebookTwitter, or Google+ to join the conversation!

 

We want to hear from you and encourage a lively discussion among our users. Please help us keep our site clean and safe by following our posting guidelines, and avoid disclosing personal or sensitive information such as bank account or phone numbers. Any comments posted under NerdWallet's official account are not reviewed or endorsed by representatives of financial institutions affiliated with the reviewed products, unless explicitly stated otherwise.